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INVENTORY MANAGEMENT

Inventory record accuracy would be decreased by

 cycle counting.
 ABC analysis.
 increasing stockroom accessibility.
 reorder points.

In the basic Q model, if the lead time doubles, the EOQ will:

 decrease by half
 remain the same
 double
 increase, but not double
 none of the above

If both the lead time and daily demand are constant (no variation), the ROP is equal to:

 Expected demand minus safety stock.
 Expected demand plus safety stock.
 Safety stock
 Daily demand times lead time.

The two most important inventory-based questions answered by the typical inventory model are

 how many of an item to order and with whom the order should be placed.
 when to place an order and what is the cost of the order.
 how many of an item to order and what is the cost of this order.
 when to place an order and how many of an item to order.

The goal of ABC analysis is to

 estimate dollar value per pound.
 determine the profitability of items.
 to identify the A items for better inventory control.
 estimate average volume per dollar value.

For a company that manufactures most of its products as standards, more inventory should be placed

 equally distributed between the plants and warehouses.
 close to suppliers.
 closer to the customer.
 within the plant as work-in-process.

ABC analysis divides an organizations on-hand inventory into three classes based upon

 unit price.
 the number of units on hand.
 annual dollar volume.
 annual demand.

Most inventory models are made based on:

 Minimizing setup times
 Profit maximization
 Cost minimization
 Optimum influence on demand
 Minimizing lead time

A firm producing medical equipment to customer specifications is most likely using a

 make-to-stock strategy.
 mass production strategy.
 make-to-order strategy.
 assemble-to-order strategy.

If the production rate in an economic production lot size model is very much larger than the consumption rate, the results are practically the same for economic production lot size and EOQ.

 False
 True

With the quantity-discount model, an order level might not be at a minimum point of a total cost curve.

 True
 False

Which one of the following statements is best?

 A fixed interval system lends itself more to quantity discounts than does a ROP system.
 A fixed interval system requires more administrative control and computer support than does a ROP sy
 A fixed interval system requires more safety stock than a ROP system.
 In a fixed interval system, the value of Q is kept the same from one cycle to another.

Which of the following is NOT a type of inventory?

 finished goods
 MRP
 raw material
 work-in-process

Reorder point models are primarily used for independent demand items.

 False
 True

Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?

 Quantity discounts can occur and taken into account in the total cost calculations.
 Annual holding cost, annual purchasing cost and annual delivery costs are the relevant costs in the
 Partial receipts are allowed.
 Uncertainty in leadtime may not exist.

In the basic fixed-order quantity model, if annual demand doubles, the effect on the Optimal Order Quantity (EOQ) is:

 it is half its previous amount
 it doubles
 decreases by a factor of 2
 it increases by about 40%
 it is about 70% of its previous amount

Space considerations are not included in any of the economic ordering models.

 True
 False

One use of inventory is

 to tightly link production and distribution processes.
 to provide a hedge against inflation.
 to ensure that item cost is maximized.
 to tightly link a firm s production with its customer s demand.

A system that triggers ordering on a uniform time basis is called a

 reorder point system.
 fixed-period system.
 EOQ.
 fixed-quantity system.

Policies based on ABC analysis might include investing

 more in supplier development for A items.
 extra care in forecasting for C items.
 more in inventory security for C items.
 the most time and effort verifying the accuracy of records for B items.

Which of the following inventory systems would be most appropriate in controlling many items ordered from the same vendor?

 Fixed Order Quantity System
 Materials Requirements Planning System
 Fixed Time Period System
 One Period Inventory Model Using Marginal Analysis

Extra units that are held in inventory to reduce stockouts are called

 just-in-time inventory.
 reorder point.
 safety stock.
 demand variance.

What items do students typically buy on an ROP basis?

 bran muffins
 gasoline for car
 textbooks
 computer software
 wedding gifts

The difference(s) between the basic EOQ model and the production order quantity model is (are) that

 A. the EOQ model does not require the assumption of known, constant lead time.
 the production order quantity model does not require the assumption of known, constant demand.
 there are no holding costs in the production order quantity model.
 the production order quantity model does not require the assumption of instantaneous delivery.

Monitoring the temperature of tomatoes during shipment would best be done using:

 Bar codes.
 GPS
 RFID tags
 Universal Product Codes (UPC)
 ROP

The Basic EOQ model ignores:

 B and C items
 A items
 Purchasing costs
 Holding costs
 Ordering costs

In a two-bin inventory system, the amount contained in the second bin is equal to the:

 ROP
 safety stock
 EOQ
 amount in the first bin
 optimum stocking level

Fixed-order quantity models are:

 Made up of a variable order size
 Time triggered
 Fixed for a specified time period
 Event triggered